With Kosmix, Wal-Mart Buys an E-Greeter

Once known as a Google (Nasdaq: GOOG  ) alternative, Kosmix is about to become an e-greeter. Wal-Mart (NYSE: WMT  ) last night announced a deal to acquire the company for an undisclosed sum.

Kosmix has always been interesting. In 2008, it was a new search engine that positioned itself as an index for organizing content from a variety of online sources into topical pages -- a real-time Wikipedia of sorts that has since added relevant Twitter streams, blog posts, and shopping links via Shopping.com, eBay (Nasdaq: EBAY  ) , and Amazon.com (Nasdaq: AMZN  ) .

Now that Kosmix is being acquired, you can expect its "guides" to act like Wal-Mart's real-live greeters.

You: "Where can I find out more about Android?"

Kosmix: "That'll be kosmix.com aisle 'Android,' sir. I believe we have a sale on accessories today."

You: "Cool."

They're part of what Kosmix co-founder Anand Rajaraman calls the Social Genome in this blog post, culling and categorizing content from the Social Web for an estimated 17.5 million monthly visitors to the company's sites. Now that data will help Wal-Mart sell more online.

How much more is an open question. Research suggests that e-commerce is becoming an increasingly important part our lives as consumers. U.S. shoppers spent $165.4 billion online last year, up 14.8% from the year prior according to Commerce Department data. Wal-Mart booked $421.8 billion in revenue last year.

My sense is that, by adding social intelligence to its digital store, Kosmix will help Wal-Mart address a legitimate business need. But it's also possible that the rise of Groupon and LivingSocial has made traditional retailers think twice about how they sell. Kosmix could just be caught in a rising tide, selling while prices are high.

It wouldn't be the first time. Kosmix co-founders Rajaraman and Venky Harinarayan sold Junglee to Amazon for $250 million in 1998. The company had won acclaim for being among the first to offer online comparison-shopping.

So which is it? Does adding Kosmix equal an opportune buy that extends Wal-Mart's e-tailing capabilities? Or an impulse buy fueled by social media mania? Let us know what you think using the comments box below. You can also rate Wal-Mart in Motley Fool CAPS.

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Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Google and Wal-Mart. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy has been and always will be digital.


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